Medtronic made big news on Father’s Day when the storied U.S. company announced that it was acquiring Ireland-based Covidien for a staggering $42.9 billion in cash and stock. In effect the company is moving its principal executive headquarters to Ireland, while maintaining operational headquarters in Minneapolis.

The move is as much about lowering its tax burden and accessing its war chest of foreign cash that it can now put to use in the U.S., as it is about diversification, globalization and scale, the necessary tools to contend with healthcare reform in the U.S.

The new company will be called Medtronic plc and led by Omar Ishrak, Medtronic’s Chairman and CEO.

“This acquisition will allow Medtronic to reach more patients, in more ways and in more places,” Ishrak said in a news release Sunday. “Our expertise and portfolio of services will allow us to serve our customers more efficiently and better address the demands of the current healthcare marketplace.”

The combined company will have $27 billion in revenue of which $3.7 billion comes from emerging markets, the primary region where medtech companies’ hope of growth resides as markets slow in U.S. and Europe. The new organization will have 87,000 employees in 150 countries.

“Covidien and Medtronic, when combined, will provide patients, physicians and hospitals with a compelling portfolio of offerings that will help improve care and surgical performance," said José E. Almeida, Chairman, President and Chief Executive Officer of Covidien, the news release.

The deal is expected to close at the end of the year or in early 2015. Once the transaction is completed, each outstanding ordinary share of Covidien will be converted into the right to receive $35.19 in cash and 0.956 of an ordinary share of Medtronic plc. That represents a 29% premium on the closing stock price of Covidien on June 13. Meanwhile Medtronic shareholders will receive one share of Medtronic plc. for each share of the current Medtronic stock they own.

Medtronic expects the new company will have a minimum of $850 million of annual pre-tax cost synergies by the end of fiscal year 2018.

That will happen through consolidation or cuts in back office functions as well as in manufacturing and supply chain infrastructure, in addition to the "elimination of redundant public company costs," according to the company's news release.

An analyst with RBC Capital Markets said that the transaction was surprising given how robust Medtronic’s pipeline is but fits into senior management’s overall vision of being more global and having scale. He noted that the deal creates a more diversified, global company

“The acquisition of COV will broaden MDT’s product offering into laparoscopic surgery (energy and stapling), neurovascular (coils and stents), elements of peripheral vascular, respiratory/monitoring, and medical supplies,” wrote Glenn Novarro in a research note Monday.